Kaderli's 90% S&P Portfolio

[Hydroman]

Billy & Akaisha Kaderli have 90% of their portfolio invested in an S&P Index Fund. They do not do slice and dice nor do endless SWR calculations. They have had a thriving early retirement for 17 years with this simple allocation. From what I can tell they do not intend to change their investment allocation even though they are now in their mid 50s.

Have they blindly rolled the dice and come out lucky or do they know something that the rest of us do not?

 

[Bikerdude]

Who are the Kaderli's? Anyway if they have 2M and can live on $34,000 a year + SS and or pension what's the problem.

 

[Ed_The_Gypsy]

http://www.retireearlylifestyle.com/

These are them

 

[lswswein]

Have they blindly rolled the dice and come out lucky or do they know something that the rest of us do not?

Guess they are too busy living to bother about with SWR and S&D. No seriously S&P500 covers a large % of the domestic market - and 17 yrs ago there weren't that many indexing options. And keeping it simple I guess helps a lot along with getting lucky.

You do know they both post here right?

-h

 

[Bikerdude]

Guess they are too busy living to bother about with SWR and S&D. No seriously S&P500 covers a large % of the domestic market - and 17 yrs ago there weren't that many indexing options. And keeping it simple I guess helps a lot along with getting lucky.

You do know they both post here right?

-h

Yeah, lucky enough to lose around 45% of their investments from 2000 thru 2002. S&P500 1/2000 = 1550, S&P500 3/2007 = 1430. So -8% plus inflation for 7 years. Like I said if you can live off the dividends your OK.

 

[chinaco]

I read their book and take a look at their site from time to time. On a side note, I admire their courage to step out there and follow their dream.

From a portfolio management perspective. The S&P 500 can be volitile, but it is also fairly stable as far as equities go. Since it is a blend, one gets some growth and some value coverage.

They follow the LBYM philosophy and manage expenses aggressively, yet have a comfortable lifestyle that is more tuned into experiences and people rather than acquiring objects and stuff.

If you go to their site and read, you would find that when they started, they were using an approximate 4% WR... maybe a little above. The S&P has grown fairly well over the last 20 years, so they have had the advantage of having the wind behind their back. I am not sure of their net worth, but if they stuck with their expense management, their portfolio had to grow substantially.

I suspect that part of the growth spurt in the market over the last 20 years is due to IRAs, 401ks, etc. These types of accounts have fostered the creation of a new class of investor (the masses) that has pushed a bunch of money into the market. But that is another story.

 

[MasterBlaster]

In one camp (The Bernsteinites) are the slice and dicers in the other camp are the (Bogleheads) who believe that the market based weighting is the most efficient portfolio.

Since the S&P500 fits well as a market weighted portfolio, although limited to large caps, it really isn't too far off of the Boglehed approach.

And it is simple to understand and simple to implement.

 

[RgrGd]

I am not too surprised about the Kaderli story. Maybe some of their income is book royalties. They do have a real message to tell. Too bad more are not listening.

I am in my 20th year of retirement and doing well. If I had know about the 4% rule, I may not have done it. There are powerful forces out there that can work in your favor if you harness them to your wagon. DCA out is not one of them.

Of course, a generally up market does most of the work.

 

[haha]

I am not too surprised about the Kaderli story. Maybe some of their income is book royalties. They do have a real message to tell. Too bad more are not listening.

Could you summarize their message for us?

Ha

 

[Mwsinron]

Could you summarize their message for us?

Ha

I think you are supposed to buy the book

 

[Nords]

I think you are supposed to buy the book

If you have a Hawaii state library card then you can borrow the copy that I donated.

 

[yakers]

A few things make their choice of the S&P(I assume 500?) a good one. First it is simple, second it was the best thing around and as much as I love Joe Dominguiz (Your MOney Or Your Life) his use of Treasuries is bad financial advice, better the S&P500. Yes, there would have been a 40% drop around 2000 but the K's are aware enough to cut back spending or work a little to ad income. The third good thing is that the S&P should work over the long term and these folks retired early and probably have 40+ years for their plan to run.

I would suggest someone looking at long term funding to look at a single Target Retirement or Lifestyle fund instead of the S&P500 alone. It may be that capital gains taxes are an issue in the K's not revising their fund structure. IMHO they are to be commended in having a good plan and keeping to it. But as drigooch pointed out DCAing out of funds can be a problem.

 

[wildcat]

It seems their philosophy & RE approach is:

simple living includes simple investing

Besides, how could I critique a couple's RE approach who retired WAY earlier than I ever will?

 

[Alex]

IMHO, Billy and Akaisha are two incredible people that really and truly love each other. (You really can't put a price on true love, can you? ) I visit their website frequently and am constantly inspired by their (ongoing) story. Sure, the value of their portfolio fluctuates, but the 'value' of their lives is constant; as in - constantly increasing and improving! If you ask me, they are very 'wealthy' people, regardless of the $$$ in their portfolio or their investment strategy. I owe them a debt of gratitude for what they freely share on their website. They are a real inspiration. Thanks Billy and Akaisha!

 

[shiny]

Could you summarize their message for us?

I think their message basically boils down to: Take charge of your own life. Don't be swept a long by the expectations of society or mere intertia. If what you want is freedom, you can really have it.

 

[RgrGd]

Could you summarize their message for us?

Ha

The short answer is no because I know I only have about 15 seconds of your time. Within that time frame:
1) Living below their means (and letting the rest compound).
2) Recognizing that wealth includes more than money (enjoy life).
3) Do it, but have a plan B (& maybe C).
4) Recognizing that there are 2 things that buy hotdogs - realized cap gains and payed-out dividends (if you tell me the 2nd can't be done with the S&P, I agree).

Sorry, out of time..

 

[Running_Man]

A few things make their choice of the S&P(I assume 500?) a good one. First it is simple, second it was the best thing around and as much as I love Joe Dominguiz (Your MOney Or Your Life) his use of Treasuries is bad financial advice, better the S&P500. Yes, there would have been a 40% drop around 2000 but the K's are aware enough to cut back spending or work a little to ad income. The third good thing is that the S&P should work over the long term and these folks retired early and probably have 40+ years for their plan to run.

It has worked out for them so it I applaud their lives while still being able to critique the investment approach. From what I read they retired with $500,000 withdrawing $24,000 per year or an initial withdrawl of 5% per year. Early down years would have killed them but instead they had the giant bull market of the 90's. The market worked out for them and now they are no doubt earning off their experiences. On the other hand when Joe Dominquiz advised treasuries they were yielding 9% per year for 30 years. Both have potential pitfalls yet both provided for early retirement based on a spend what you have available strategy.

 

[Jarhead*]

I think their message basically boils down to: Take charge of your own life. Don't be swept a long by the expectations of society or mere intertia. If what you want is freedom, you can really have it.

Let me guess. You have no children, or anybody else in your life that you are responsible for.

Hell, if you are single, or married with no children, etc. etc., you can live for yourself, and no harm no foul.

Your choice, but don't make the mistake that your advice is appropriate for
most people.

 

[deserat]

Their book is worth getting - their main point was to LBYM - to me the most important tool they have is their cost per day that they calculate - they have now several (many!) years worth of data to compare their cost per day - this number is fairly constant now and since they've been doing this for so long, the bolus of an airline ticket or other one time large sum doesn't cause such a perturbation.

Their book also focuses on one's attitude toward retirement. They try to alleviate the fears one may have retiring early: what will you do, can you afford it, what about catastrophic events, etc. Yes, they have no children so part of their journey may have been simpler, however, I believe they did do end of life care for several parents and provide other types of family support (not necessarily monetary) that one might have to 'buy' instead.

As they do advocate simplicity in general, again, their choice of the S&P 500 as the majority of their portfolio makes sense - in fact, Billy did a stint as a financial advisor before they retired and after learning about indexes had a twinge of guilt recommending loaded funds to his customers.....so, I'd wager he's got a good sense of the risks involved for them.

All in all, I think they are a fantastic example of one type of early retiree lifestyle - similar to the Terhorsts. To me their message is: retiring early with a 'rich' (in experiences and not necessarily things) lifestyle is possible, even on a shoestring.

Deserat

 

[shiny]

Let me guess. You have no children, or anybody else in your life that you are responsible for.

Hell, if you are single, or married with no children, etc. etc., you can live for yourself, and no harm no foul.

Your choice, but don't make the mistake that your advice is appropriate for
most people.

Ahh, but see there is the point. It is a choice!! One that you are free to make - you are not a victim of society.

Besides, I didn't say it was my advice, I said it was what I thought the idea behind the book was.

 

[Hydroman]

So if the a 90% S&P 500 portfolio has worked for the Kaderli's why does everyone here continue to hyper-analyze various S&D and SWR strategies? Obviously simple works.

 

[yakers]

So if the a 90% S&P 500 portfolio has worked for the Kaderli's why does everyone here continue to hyper-analyze various S&D and SWR strategies? Obviously simple works.

I like what I know about those folks but it does not mean I will follow the exact financial model. I think they are doing well and over the long term the S&P500 or total market is a good place to be. They chose this very good fund when there were not many good alternatives. But I think there are better ways to handle volatility, by having more asset classes including some fixed assets. This might add slightly to the safe withdrawal amount and reduce volatility.
I like to keep things simple, my largest fund is a Target Retirement type fund. I am just aware that while dollar cost averaging into a fund is a great way to save, there can be problems with DCA withdrawals.

 

[WM]

I am just aware that while dollar cost averaging into a fund is a great way to save, there can be problems with DCA withdrawals.

I have heard other references to this and am curious about it. But I don't want to hijack the thread so I'll start a new one...

 

[lswswein]

So if the a 90% S&P 500 portfolio has worked for the Kaderli's why does everyone here continue to hyper-analyze various S&D and SWR strategies? Obviously simple works.

Because One Swallow does not make a summer. You need to come up with your own asset allocation.

-h

 

[dex]

IMHO, Billy and Akaisha are two incredible people that really and truly love each other. (You really can't put a price on true love, can you? ) I visit their website frequently and am constantly inspired by their (ongoing) story. Sure, the value of their portfolio fluctuates, but the 'value' of their lives is constant; as in - constantly increasing and improving! If you ask me, they are very 'wealthy' people, regardless of the $$$ in their portfolio or their investment strategy. I owe them a debt of gratitude for what they freely share on their website. They are a real inspiration. Thanks Billy and Akaisha!

Exactly - well said